Business

Hong Kong shares sink after Lunar New Year break

Hong Kong trading floor Image copyright AFP

Hong Kong shares joined the downward trend across Asia as trading resumed after the Lunar New Year break.

The Hang Seng closed down 742.37 points or 3.85% to 18,545.80.

Markets in China remained closed for a longer New Year break. Those markets that were open in the region over the past days had all seen hefty losses.

Japanese shares had tumbled in to bear territory after a two-day rout, but the Nikkei is closed on Thursday for a national holiday.

The continuing concern over the global economy and China's slowing growth was confirmed by US Federal Reserve chair Janet Yellen in a speech to Congress on Wednesday.

She warned that financial conditions in the US had recently become "less supportive of growth", while China's "unclear" currency policy was fuelling global stock market volatility.

"This uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth."

Image copyright Getty Images
Image caption Janet Yellen, taking a critical look at the global economy

While she said she was confident, China's economy was not facing a "hard landing", Ms Yellen said the overall uncertainty created by the world's second-largest economy was behind some of the steep falls in global commodity prices, which in turn were creating stress for exporting nations.

Auto woes

South Korean shares also resumed trade after the new year break and joined the regional downward trend.

Seoul's Kospi fell sharply by 2.9% to close at 1,861.54 points, after retreating as much as 3.1%, its biggest percentage loss since May 2012.

Car makers were among the worst hit as fresh data showed that vehicle exports dropped by almost 20% in January, because of falling demand in emerging markets.

Hyundai, Kia and Ssangyong all lost around 2%.

Australia beats trend

Australian shares, though, managed to edge higher on Thursday, providing some relief after two days of losses.

The ASX/200 closed 1% higher at 4,821.10 points after losing more than 4% since the beginning of the month.

Before the market opened, the Virgin Australia airline reported a swing back to half-yearly profit after cutting costs and profiting from lower fuel prices.

Image copyright AFP
Image caption Virgin profits took off but shares failed to get on board

"All fundamental business metrics are in place for the group to report a profit for the 2016 financial year," Virgin chief executive officer John Borghetti said in a statement.

The forecast of full-year profitability comes after two years of net losses.

However, investors seem to have expected better results and remain cautious about the airline's prospects.

Virgin Australia shares fell by more than 6% throughout the day.

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